A month ago, news came out that Carousell launched a property platform in partnership Midland Realty, one of the biggest brokerages in Hong Kong.
I was shocked. Two giants with lots and lots of $$$ combining forces? Would this finally revolutionize the brokerage market in Hong Kong? Would this squeeze out many other PropTech players in the market?
It won't. (Or at least I don't think it will...I've been wrong before.) But here's my logic for it:
Carousell is a listing portal. 28Hse is a listing portal. Spacious is a listing portal. Squarefootis a listing portal. House730 is a listing portal. Property.hk is a listing portal. CNP is a listing portal. EPRC is a listing portal. SmartME is a listing portal.
Listing portals have been around for years and there is an overwhelming number of listings available online. Yet no single player has been able to dominate the market and be the go-to listing portal for all properties in Hong Kong. In addition, older portals haven't developed a strong competitive advantage over newer portals, making it easy for newer entrants, such as House730 and SmartME, to capture part of the market with only a sizeable advertising budget.
On Carousell, the main differences between real estate listings and other listings are:
higher transaction price
requires an offline component of visiting the flat
listings are less standardized and more complex (different buildings, different views, different furniture, etc.) and require more market knowledge
Most people don't transact real estate regularly. And when they do, it's a significant enough decision that will activate them to visit a dedicated listing site, where they can see other market transactions and analysis too. Spacious does a good job here, showing how the listing compares to others in the market on price.
The biggest advantage of using Carousell is that users are already active on the app. This lowers the acquisition cost of new customers and potentially helps the listing reach more viewers. However, similar to previous listing sites, this does not change the fundamentals of why many individual landlords don't regularly use listing portals to directly advertise their properties anyways.
Mindset & Nature of landlords:
RISK: Listing portals are riskier. Landlords are required to pay a fixed "advertising" fee with no guarantee of a tenant. Additionally, ads typically expire after 1-3 months, however, properties can stay vacant for longer, especially nowadays, making it feel like a potential waste of money. Property agents mitigate that risk as landlords only have to pay once an agent closes a deal.
TIME > MONEY: It's easier and faster to Whatsapp message several agents you've known for years than to create a listing in a system. Landlords need to do a lot more work when advertising their unit, such as organizing property details and sqft areas, taking photos of the unit, and arranging site visits. Outsourcing all this to a property agent makes everything much easier.
AGE: In Hong Kong, many landlords are older (over 55). They're comfortable with tools they use every day such as Whatsapp. They are not comfortable learning new tools constantly, especially if they only need to find a new tenant every 2-4+ years.
SALES vs ADVERTISING: Sales is an active process. Advertising is a passive one. Outward sales are much more effective in the short-term whereas advertising helps build brand awareness over the long-term. Landlords prefer to take an active approach, having agents push their property over others, instead of a wait-and-see approach. Every day their property is vacant counts.
There are several listing portals in Hong Kong. But most are being used by property agents looking to advertise their listings. We looked at some of these listing sites to find the ratio of posts by agents vs landlords, and here are some results. (Note: this summary data was extracted on a random subset of the data available on these property listing sites)
None have really been able to successfully crack the landlord market. So we're still going to need property agents for a long time to come.
CEO & Founder, My Propty
I'm CEO & Founder of MyPropty, a platform helping landlords and property managers improve their portfolio returns by digitizing and automating their property management. We work with mid-sized professional landlords to help them manage their real estate portfolios with data and technology.